Reviewing CPS 230: A deep dive into operational risk management.
You’ll be aware by now that the Australian Prudential Regulation Authority (APRA) unveiled its final version of the Prudential Standard CPS 230 on Operational Risk Management earlier in the year. But what does the standard mean deep down for regulated entities? Let's delve into the intricacies of this new standard and understand its specific implications for your business.
The extended timeframe: a blessing or a curse?
The most notable change from the draft version of the standard is the extension of the timeframe by 18 months, now set for July 2025. At first glance, this might seem like a generous reprieve. However, APRA's message is clear: this extension is not an invitation for complacency.
APRA board member Therese McCarthy has emphasised, “We will be assessing entities’ preparedness for the new standard throughout 2024. Prudent boards should not be waiting until the new year to start thinking about how to meet their new commitments. They need to move now.”
This statement underscores the urgency and importance of proactive preparation.
Understanding the standard: a comprehensive guide
The CPS 230 standard is not just another regulatory document. It's a transformative blueprint designed to revolutionise how regulated entities approach their operational risks. But what does it entail?
- Key principles: These foundational guidelines are the backbone of the entire standard. They provide a roadmap that permeates every other requirement, ensuring a holistic approach to risk management.
- Risk management framework: Collaboration is the name of the game here. The standard calls for a unified approach, urging risk teams to work hand-in-hand. The goal? To ensure that every aspect of risk management aligns seamlessly with the entity's overarching objectives.
- Roles and responsibilities: Clarity is paramount. The standard emphasises the importance of defining roles, especially the relationship between the board and senior management. It's a call to action, urging entities to ensure that everyone knows their part and plays it well.
- Operational risk management: Here, the focus sharpens on controls management. The standard introduces rigorous requirements, urging entities to take a deep dive into their control mechanisms, ensuring they're robust and effective.
- Business continuity: Change is the only constant, and this section of the standard acknowledges that. It emphasises the importance of being prepared for unforeseen disruptions, ensuring that you can weather any storm.
- Management of Service Provider Arrangements: In today's interconnected world, third-party relationships are more crucial than ever. This section expands on the importance of these relationships, emphasising the need for due diligence and consistent risk management.
Protecht's role: navigating the CPS 230 waters
While the CPS 230 standard provides a roadmap, navigating its intricacies can be challenging. This is where Protecht steps in. As a global enterprise risk management solutions provider, Protecht offers a suite of services designed to help you sail smoothly through the CPS 230 waters.
From consulting services that offer insights into risk management best practices to the Protecht ERM platform that provides an integrated solution to risk management challenges, Protecht is equipped to guide entities every step of the way.
Protecht's integrated solution, Protecht ERM, is more than just a platform. It's a comprehensive ecosystem designed to address the key pillars of the CPS 230 standard. Whether it's operational risk management, resilience and business continuity, vendor risk management, or board and executive oversight, Protecht ERM has got it covered.
But what sets Protecht apart is its commitment to empowering regulated entities. The platform is designed to provide actionable insights, ensuring that entities are not just compliant but also equipped to make informed decisions.
Next steps for your organisation
The introduction of APRA’s Prudential Standard CPS 230 is a significant milestone in the realm of operational risk management. While it brings with it a set of challenges, it also offers you an opportunity to elevate your risk management practices. With the right guidance and tools, such as those offered by Protecht, you can not only achieve compliance but also set new benchmarks in operational risk management excellence.
To find out more about how to meet the CPS 230 standard, download our new white paper CPS 230: How to apply the operational risk management standard. This white paper provides a paragraph-by-paragraph review of the legislation and sets out how you can comply with every step along the way.
For over 20 years, Protecht has redefined the way people think about risk management with the most complete, cutting-edge and cost-effective solutions.